“Sustainable and innovative breeding requires scale and knowledge. That way, you can respond to the trend of having fewer, but more professional customers, who have different requirements for propagation materials and to the trend of increasing influence of retailers on end consumers”, says Johan Trouw, managing director Supply Chain with Dümmen Orange.
By Peter van Leth
Dümmen Orange has been in the news on a regular basis regarding yet another acquisition or partnership with a floricultural breeding and propagation company. They also collaborate with floricultural production companies. It all fits in with the company’s ambition: they want to have 20 to 25% of the market share of the most important crop groups, resulting in a global top-3 position for these crops, by 2020. “However, this is our aspiration, not a goal that has to be reached at all cost”, explains Johan Trouw, managing director Supply Chain.
Will Dümmen Orange’s growth ever come to a halt?
“For some crop groups, we’ve reached the desired market share, but for a number of other groups, we haven’t. Two areas where we’d like to see more growth include flowers from seed and tropical plants. With regards to the latter, we were delighted we could add phalaenopsis to our assortment last year. In a growing phase, we’d like to take big steps, so it makes more sense to take over big and medium sized companies than small companies. However, growth is never a goal in itself. Our plants and our customers always remain our central focus. The companies that we take over shouldn’t just add something to our portfolio, they also have to be financially healthy and they’ve got to fit in with our culture. What’s nice though, is that because of our scale, companies are now coming to us instead of the other way around.”
What is the underlying strategy for this growth?
“Scale helps innovative and sustainable breeding. By focussing on healthy, unforced growth, we can respond better to market developments and become more professional with regards to R&D, sustainable entrepreneurship, phytosanitary requirements, IT, marketing and sales. That way, we can offer our partners stability, reliability and growth opportunities.”
Do you think you’ll fulfill your 2020 ambition?
“Yes, we expect we will. But again: we won’t try to reach our goals at any cost.”
Why do you take over plug producers, but not end product producers?
“Plugs are inherently linked to the quality of rooted cuttings, which is something we work with. It’s the only by-product we include in our portfolio. With our knowledge and techniques, we innovate the plug segment and make it more sustainable. End products on the other hand, are not part of Dümmen Orange’s core activities. There’s one exception: we grow our own roses. Purely as a marketing tool, to make it easier to introduce our roses.”
Are you planning any further acquisitions?
“That’s something I can’t comment on. But we don’t have any plans for the near future anyway.”
Can Dümmen Orange be described as a conglomerate of breeding companies?
“That’s a bit too short-sighted. I consider Dümmen Orange to be more of a family of companies, with room for different, crop specific, corporate cultures. We’d like to hold on to that family feeling as much as we can. While trying to create some sort of unity at the same time, especially with regards to our values and ambitions.”
Are you succeeding?
“We’ve only been active as Dümmen Orange since spring 2015. Each acquired company needs time to integrate. But I do feel that we’re operating as a whole more and more. There definitely is a certain Dümmen Orange culture. It’s visible in the integration of the younger generation in the various companies. They form a dynamic whole. And unity is also demonstrated in the uniform policies with regards to R&D, marketing, phytosanitary requirements and integrated crop protection.”
Why is the floricultural breeding sector still lagging behind the vegetable breeding sector?
“That isn’t completely true. With regards to order processing for example, vegetable breeders can learn a lot from floricultural breeders. The way in which they manage to deliver the same, reliable propagation materials, even during peak periods or shorter cycles, is quite extraordinary.”
To which extent is it true then?
“The threshold to invest in R&D is many times higher for floricultural crops than for vegetables. This is because the breeding companies are generally smaller and the range of crops and varieties is much wider. Furthermore, the conservation of specific parental lines is less urgent when it comes to vegetative reproduction. And generative propagation isn’t widespread yet when it comes to floricultural crops.
So are crossings still the way to go?
“Traditional crossing has reached its limit for many crops. It doesn’t bring any further, significant improvements. And technological developments mean that other techniques have now become financially viable for floricultural crops.”
Which techniques would you say are the most promising?
“A whole range of techniques, including cell biology, genomics, bioinformatics, marker technology, seed technology and phytopathology.”
What about CRISPR/Cas9?
“First of all, a political decision needs to be made, to determine whether organisms bred through CRISPR/Cas9 are genetically modified or not. In addition to this political/ethical question, we need to determine who will own the products bred through this technique. So there are still lots of questions, making it commercially uninteresting for now. Having said that, there’s no real stopping it of course, the technique will eventually make it.
Does Dümmen Orange support the Position Paper ‘Next Level Plant and Flower Breeding’?
“Dümmen Orange is willing to collaborate precompetitively with regards to producing more resilient crops through breeding activities. We’re happy to share our knowledge, although we’ll never give away all our secrets of course. We expect the same from other participants. There’s no room for a non-committal approach, participants have to be aware that it’s a matter of give and take and picking up as well as delivering.”
Is that kind of collaboration ever going to work?
“Definitely, as long as the joint interest is large enough. The collaboration between the five largest chrysanthemum breeders, all working on cleaner and more sustainably produced propagation materials, is a good example.”
What if investor BC Partners would sell their Dümmen Orange majority stake?
“That’s a question we get all the time. I don’t know the exact numbers, but most of these private equity funds generally get involved in projects for a period of five to seven years. During that period, the return on their investment goes up because the value of the investment increases. I’d say it’s clear by now that we have realised that value increase by attracting young talent, developing a good phytosanitary system including the production of Elite propagation materials in a new, modern facility in Germany and by heavily investing in R&D, people, techniques and facilities. All of this will pay off. So if BC Partners decides to get out, they will leave a company that’s stronger and healthier than when they found it.”